GBP/USD Forecast: Sellers could retain control while Pound Sterling stays below 1.2600
- GBP/USD staged a rebound after touching a multi-week low on Monday.
- 1.2600 aligns as strong resistance for the pair.
- GBP/USD could stretch higher in case risk flows continue to dominate the market action later.
GBP/USD lost nearly 0.8% on Monday and touched its lowest level since mid-December below 1.2520. Supported by the improving risk mood, the pair regained its traction early Tuesday and was last seen trading in positive territory slightly above 1.2550.
The broad-based US Dollar (USD) strength weighed on GBP/USD at the beginning of the week. In addition to surging US Treasury bond yields, upbeat ISM Services PMI data for January, which showed that the service sector's business activity expanded at its strongest pace since September, allowed the USD to outperform its rivals.
Early Tuesday, the UK's FTSE 100 Index is up more than 0.5% on the day and US stock index futures trade marginally higher. In case Wall Street's main indexes gather bullish momentum after the opening bell, the USD could lose interest and help GBP/USD extend its recovery.
Pound Sterling price today
The table below shows the percentage change of Pound Sterling (GBP) against listed major currencies today. Pound Sterling was the strongest against the Swiss Franc.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.05% | -0.17% | -0.11% | -0.26% | -0.01% | -0.04% | 0.04% | |
| EUR | 0.05% | -0.09% | -0.05% | -0.21% | 0.05% | 0.02% | 0.11% | |
| GBP | 0.17% | 0.09% | 0.04% | -0.12% | 0.13% | 0.11% | 0.19% | |
| CAD | 0.10% | 0.05% | -0.04% | -0.16% | 0.10% | 0.07% | 0.16% | |
| AUD | 0.26% | 0.21% | 0.09% | 0.15% | 0.26% | 0.21% | 0.30% | |
| JPY | 0.00% | -0.04% | -0.17% | -0.10% | -0.27% | -0.04% | 0.05% | |
| NZD | 0.04% | -0.02% | -0.13% | -0.07% | -0.23% | 0.03% | 0.08% | |
| CHF | -0.04% | -0.11% | -0.20% | -0.16% | -0.32% | -0.05% | -0.09% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
The US economic docket will not offer any high-impact data releases on Tuesday that could influence the USD's valuation. Hence, investors are likely to react to changes in risk perception.
Comments from central bank officials will also be watched closely by investors. The market positioning, however, suggests that the USD doesn't have a lot of room on the upside even if participants continue to push back against a rate cut in March. According to CME FedWatch Tool, there is a less than 20% probability of a policy pivot at the next meeting.
GBP/USD Technical Analysis
The Relative Strength Index recovered toward 40 after dipping below 30 on Monday, suggesting that GBP/USD's latest rebound was a correction rather than the beginning of a reversal.
On the upside, 1.2600 (psychological level, static level) aligns as key resistance. Buyers could take action if GBP/USD reclaims this level. In this scenario, 1.2640 (Fibonacci 23.6% retracement of the latest uptrend) and 1.2680 (100-period Simple Moving Average) could be seen as next recovery targets.
Immediate support is located at 1.2540 (Fibonacci 38.2% retracement) before 1.2500 (psychological level, static level) and 1.2450 (Fibonacci 50% retracement).
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Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
